Fed speakers continue to echo recent hawkish Fed rhetoric. Fed Vice Chairman Stanley Fischer said that the central bank is trying to “avoid surprising the markets and government” when they hike, setting the stage for a hike in December. On the other hand, Atlanta Fed Chair Dennis Lockhart reiterated that pace of increase will likely remain gradual. Yesterday’s initial jobless claims and Philly Fed business outlook all painted a rosier growth picture while leading index rebounded to positive territory, signaling quicker growth in 4Q. USD weakened against all G10 FX while the USD Index slipped to close 0.67% lower at 98.98
EUR/USD
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Fundamental: EUR peaked at 1.0762 yesterday due to weakened greenback. However, the rally of EUR/USD lost strength above 1.075 handle and made a pullback afterwards.The latest ECB minutes revealed that risk of inflation target miss increased. Euro dropped to a low of 1.0668 after the news but it rebounded afterwards. Wholesale inflation data from Germany and preliminary confidence data from Eurozone will be released today .
Technical: While 1.0750 caps intraday upside corrections, bears target a test of 1.0560 next ahead of an assault on year to date lows. Only a close above 1.08 eases immediate downside pressure.
Interbank Flows: Bids 1.06 stops below. Offers 1.08 Stops above.
Retail Sentiment: Bullish
Trading Take-away: Short 1.0830 targeting 1.0560
GBP/USD
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Fundamental: Despite a larger-than-anticipated fall in retail sales figures, GBP found support on profit-taking in the USD and rallied against the Greenback overnight through 1.53 touching intraday highs of 1.5335. Attentions will turn to a series of speeches from Fed and ECB officials for further directional guidance for GBP into the weekly close
Technical: While 1.5350 contains upside reactions expect a test of of bids at 1.50 as the next bearish objective. Only a close above 1.54 eases immediate bearish bias
Interbank Flows: Bids 1.52 stops below. Offers 1.5350 stops above
Retail Sentiment: Bearish
Trading Take-away: Sidelines for now
USD/JPY
Outlook: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks): Bearish
Fundamental: JPY strengthened to 122.82 after the Bank of Japan kept policy steady. Although no new monetary easing was imminent, Kuroda said there was no limit to how long QQE can last. Japan’s Merchandise Trade Export growth posted a reading of -2.1% which missed the market expectation of -2.0%.
Technical: While 122.50/30 supports downside reactions, market structure remains bullish to test 2015 highs next
Interbank Flows: Bids 122 stops below. Offers 124 stops above
Retail Sentiment: Bearish
Trading Take-away: Long 122.50 stops to entry target 125.50
EUR/JPY
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Fundamental: The Bank of Japan as widely expected kept rates on hold and QE annual pace at 80 trillion yen despite entering a technical recession earlier part of the week.
Technical: Only a close above 133.50 eases immediate bearish pressure, while 132.50 caps upside reactions expect retest of 130.50 lows
Interbank Flows: Bids 130.50 stops below. Offers 132.50 stops above
Retail Sentiment: Bearish
Trading Take-away: Sidelines for now
AUD/USD
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Fundamental: AUD lifted after minutes of the US Federal Reserve signaled a likely slow rise in interest rates once lift-off begins. Australia’s economy continues to grow at a subpar pace but has still fared relatively well given the huge swings in its terms of trade in recent years, according to Reserve Bank of Australia’s (RBA) head of economic analysis Alex Heath.
Technical: While .72 caps corrective upside reactions expect a retest and breach of .7010 as bearish momentum builds for a retest of year to date lows. A close above .73 eases bearish pressure and resets focus on the upside.
Interbank Flows: Bids .7100 stops below. Offers .7250 stops above
Retail Sentiment: Bullish
Trading Take-away: Sidelines for now
USD/CAD
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bullish
Fundamental: CAD gained against a broadly weaker US dollar while the loonie’s strength was restricted by a fall in US crude oil prices and an unexpected dip in Canadian wholesale trade figures. Canadian wholesale trade fell by 0.1 percent in September from August, compared with an expected 0.3 percent gain in a Reuters poll.
Technical: Offers just above 1.3350 stall the upside ratchet, bulls have the ball while 1.3220 supports intraday downside. However a close below 1.3220 would ease the near term bullish bias.
Interbank Flows: Bids 1.3250 stops below. Offers 1.3350 stops above
Retail Sentiment: Bearish
Trading Take-away: Sidelines for now
